After peaking twice just south of $16, the price of silver has started to back off.
The precious metal put in a stellar performance in the two months between early November and early January, climbing from $14 to almost $16.
That was a powerful 14.3% move. Now, we’re starting to see some traders take profits and even rotate back into stocks which have turned higher in the last three weeks.
But even the rally in stocks has likely been overdone, and a near-term sell-off in the broader markets could lie ahead.
With silver prices holding near their 200-day moving average and possible renewed weakness in the U.S. dollar, we could well see this precious metal return to rally mode before long.
And that could propel it to take out a key psychological level in the process.
Here’s how the price of silver is moving now, plus three different ways to profit from this silver rally in 2019…
Here’s How the Price of Silver Is Trending Now
The price of silver drifted lower in the last few trading days after hovering steadily near the $15.60 level.
The metal was fighting not only a relief rally in the U.S. dollar, but also a steady climb in the broader markets. That culminated on Friday with the S&P 500 hitting levels not seen since early December.
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The excitement of that rally sucked capital away from precious metals.
Silver managed to hold above $15.50 until Friday, then sold off as the DXY rallied from near 96 to 96.4 that morning.
Here’s a look at the DXY chart:
That was enough to beat silver prices back from $15.50 to Friday’s close at $15.31.
Then on Monday, the silver price drifted lower to close the shortened trading day at $15.15. But dollar volatility and a host of warnings emanating from the Davos World Economic Forum pushed stocks back, allowing for a small reprieve in silver to the $15.30 level.
Here’s where I see the price of silver heading next…
What’s Next for the Price of Silver in 2019?
We can clearly see that after the DXY peaked in early December, it has managed a relief rally over the past week.
With Monday’s action, we’ve seen the DXY bounce up to the 96.45 level on an intraday basis. But I think the 50-day moving average near 96.35 is likely to act as overhead resistance.
Concerns about trade wars, the slowing of global economic growth, and a more dovish Fed are all likely to keep pressure on the dollar and ensure the prevailing trend remains downward.
And that should be supportive for silver prices.
This chart shows silver’s recent correction took the metal’s price back down to the 200-day moving average.
Odds are this will act as support. But if the dollar’s relief rally runs higher, silver could still see more weakness. Technically, the next support level is down at $15, then at $14.75.
If that happens, I expect a lot of smart money to step in and buy hand over fist as they load up at bargain levels.
Once silver does reverse and head higher anew, I still see that next big move to reach for $16 then $16.25. This will also help pull the 50-day moving average (blue line) up toward the 200-day moving average (red line), eventually forming a technically bullish “golden cross,” which looks imminent for gold.
Recent research from Srsroccoreport.com suggests positive fundamentals for silver based on the outlook for silver production. This one chart says it all.
On that note, let’s take a quick look at my recent silver trades.
The 2x leveraged ProShares Ultra Silver ETF (NYSE: AGQ) is down 3.3% and remains a buy.
The Global X Silver Miners ETF (NYSE:SIL) has given back about 2.7% and could find support soon. SIL is a buy.
And lastly, the SLV January 2021 calls with a strike price of $15 are off about 13.3%. But given their long term to expiration, they too remain a buy.
Overall, silver has paused recently, then dialed back as the dollar enjoyed a rally along with stocks. I expect the dollar to soon renew its downtrend and for stocks to at least take a near-term breather.
Meanwhile, silver is in a strong seasonal period, which should help boost the metal for the next several weeks or even beyond.
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